What would be the return on my investment if the ROE is 24%?

And I invested $1000?

It would be 24% of $1,000, or $240. I'm assuming this is for a term of one year.

240

I'm probably wrong here, but Return on Equity doesn't necessarily equal return on investment.

Equity is defined as Assets minus Liabilities; its the value available to the shareholders. When you invest, you are essentially buying equity.

When you invest, you are buying company equity, but not necessarily at the price of the equity. For example, Microsoft has a total shareholder equity of 32bn versus a market cap of 323bn. Basically, you are buying 1/10th your invested value in equity.

Secondly, when you are buying a minority position, the ROE does not actually effect you. While an ROE of 24% is very strong, your actual return on investment is subject to weird fluctuations.

Of course, if you AREN'T buying stuff on the stock exchange, then you probably will get $240 returned to you.

If you are the CEO of the company, you'll get $240 from $1000 investment. however, this does not apply if you are stock investor. you return is not subject to ROE, rather is affected by the stock price performance. for example, if you buy stock with $1000 and sell it for $1100 later, so your return on investment is 10% for that year, no matter what the ROE is.

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